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Adobe to acquire ecommerce platform Magento for $1.68bn

Private equity firm Permira only acquired Magento from eBay for $200m three years ago

Adobe has agreed a deal to acquire Magento Commerce for $1.68 billion with the aim of integrating the Magento Commerce Cloud with the Adobe Experience Cloud "delivering a single platform that serves both B2B and B2C customers globally". The acquisition is the third biggest in Adobe's history.

According to Adobe, the Magento Platform "brings together digital commerce, order management and predictive intelligence into a unified commerce platform enabling shopping experiences across a wide array of industries".

Magento's ecommerce cloud platform is used by a number of big-name companies, including Coca-Cola, Warner Brothers Music, Canon and Nestle.

The aim of the acquisition is to better enable Adobe to compete against Oracle and Salesforce, which both have relatively mature commerce platforms - Salesforce acquired Demandware in 2016 for $2.8 billion to provide it with a similar range of capabilities that Magento will bring to Adobe.

Adobe's statement continues: "The Magento Platform is built on proven, scalable technology supported by a vibrant community of more than 300,000 developers.

"The Magento partner ecosystem provides thousands of pre-built extensions, including payment, shipping, tax and logistics. This level of flexibility fives businesses the ability to quickly ramp and iterate their commerce capabilities for their unique business needs."

Brad Rencher, general manager of Adobe Digital Experience, under whom the Magento acquisition will be managed, described the combination as providing Adobe with "leadership in content creation, marketing, advertising, analytics and, now, commerce". This he added, would enable "real-time experiences across the entire customer journey".

He continued: "Embedding commerce into the Adobe Experience Cloud with Magento enables Adobe to make every moment personal and every experience shoppable."

Magento CEO Mark Lavelle, meanwhile, will continue to head-up Magento as part of the Adobe Digital Experience, reporting to Rencher.

While Lavelle will enjoy a generous fiscal reward as a result of the deal, it will also provide a bid payday for private equity firm Permira, which acquired Magento for an estimated $200 million in November 2015 from eBay, after eBay had picked it up for about $180 million 2011.

And Adobe is certainly paying a high price for a promising - rather than well-established - company. Its 2017 revenues weighed in at $150 million, according to US trade journal Adweek.